Home Care Company Sacrifices Some Margin to Achieve 14% Turnover Rate

With a tight labor market and a shortage of caregivers, attracting and retaining top talent is one of the biggest challenges facing home care companies today. But one family-owned home care provider is minimizing the problem in part by sacrificing profit margin.

Nationally, the average caregiver turnover rate hovers just above 65%, according to a 2017 study by Home Care Pulse, a research firm for personal care agencies. Meanwhile, Maryland-based private-duty home care company Family and Nursing Care (FNC) boasts an annual turnover rate of just 14%, according to its 2018 annual report. Instead of prioritizing a high profit margin, FNC focuses on a high volume of clients, according to CEO Neal Kursban, whose mother Sandy Kursban started the company in 1968.

“You’ll go to these national conferences, and you’ll hear you’ve got to earn X percent, 8% or 10%, profit margin,” he told HHCN. “And our philosophy has always been — and this might sound odd — to actually earn less than 5%, to have our profitability [percentage] be intentionally smaller.”

The single-location company makes up the difference in volume.

“We’re probably about 10 to 12 times the size of the average home care company in a single location,” said Mitch Markowitz, VP of business development.

FNC has a roster of about 1,200 caregivers, who serve more than 600 clients per day in and around Washington, D.C. About 700 of those caregivers work under the “classic model,” as independent contractors available to clients at a lower price point, while about 500 are company employees directed by a plan of care created and supervised by a nurse, under the “select model,” according to Kursban. Most of those caregivers offer a certified nursing assistant level of care, he said.

“[That] level of penetration … really helps us to focus on keeping people safe and independent at a moment’s notice,” Markowitz told HHCN.

Meanwhile, hourly pay rates several dollars above the industry average and benefits on par with the company’s office staff help keep caregivers happy. They receive $14 to $20 per hour, while the market average there is closer to $12.50, Kursban said.

Additionally, select caregivers are offered ongoing training, a 401k with discretionary match, free supplies and overtime, according to the 2018 annual report. In 2017, caregivers were paid $750,000 worth of overtime, at no additional cost to clients, the report says.

Again, Kursban credits smaller profit margins.

“That money goes back to our staff,” he said, adding that FNC also gives back to its foundation and area nonprofits. In 2017, FNC donated $140,000, according to the annual report.

Customer Satisfaction

When it comes to retaining customers, FNC has found success offering high quality care at market rates.

The majority of business comes from its classic care model. Because caregivers under this model are independent contractors with less overhead for the company, customers pay about $4 to $5 less per hour. Meanwhile, FNC’s select model, in which the company employs caregivers directly, brings in about one-third the business of the classic model, Kursban said.

He compared the models to cars: the classic being a reliable, no-frills ride that gets you from place to place, while the select model is a souped-up sports car.

“Sometimes price is going to be a major factor [for customers], and if you can pay $21 an hour versus $25, and it’s not as fancy as a car but you still have a great caregiver in your home, then a lot of people prefer that option,” Kursban said. “Others prefer the souped up version.”

For both models, caregivers are screened and matched essentially the same way, he said.

Customers are satisfied with those offerings, according to internal company surveys. Of those surveyed, 98% said they would refer FNC to a friend.

Plans for Expansion

When Sandy Kursban started the company 50 years ago, home care wasn’t the booming industry it is today.

Of more than 26,000 private duty home care companies in the country, only about 27% have been around for more than 10 years, according to Home Care Pulse.

That puts FNC — and CEO Neal Kursban — in a unique position, knowing how the industry has evolved from the days when he would see his mom fielding calls during shopping trips to the local mall.

After a 3-year, post-college stint as a recruiter and district manager for Taco Bell, Kursban joined the family business in 1995. At first, part of his job was to fill in as needed, whether it be for receptionists out sick or care coordinators on vacation. Earlier this year, Kursban made the move from president to CEO, a transition that’s allowed him to focus on company expansion.

Though early in the process, FNC just signed a lease on its second location in nearby Howard County, Maryland. Going forward, Kursban’s goal is to add two locations a year, possibly expanding to other Mid-Atlantic states as early as 2023.

That growth wouldn’t be possible without 8-year company veteran Jeff Zukerman taking over as president, Kursban said.

“As we are going to be expanding, I wouldn’t have been able to even sign a lease [or have our Howard County team] start interviewing and hiring caregivers had I still been doing what I was doing as the president of the company,” Kursban said.

Written by Bailey Bryant

Photo Credit:

  • Neal Kursban: Courtesy Family and Nursing Care
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Bailey Bryant
When she’s not reporting, Bailey likes exploring Chicago for brunch spots and work out classes. Previously, she worked in book and magazine publishing before becoming a tv reporter.

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